July data revealed that there were 24% more enquiries on two bedroom homes than three bedroom, while the number of sellers on the market fell by 10.6% year-on-year.
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “First-time buyers are taking the brunt of the consequences of the lack of housebuilding, according to today’s data.
“Younger people looking to get a foot on the ladder are facing fierce competition and this, along with the lack of supply, is driving up prices at a faster rate when compared to larger properties.
“This is likely to create longer rent tenures for younger generations, who may now need to postpone their dream of homeownership until later in life.”
In July house prices rose by 0.1% to average at £294,542, although they have increased by 5.1% year on year. In June house prices rose by 3% alone.
Ben Thompson, managing director of estateagent4me.co.uk, said: “The announcement from the Government last week that it is strengthening planning laws is welcome, as it is vital that we work together to ensure there is an increase in housing supply across the UK.
“More houses will provide a balance against demand and mean prices don’t rise faster than inflation.”
